Are You Too Old to Buy Life Insurance?
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UPDATED: Oct 18, 2019
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Some say it’s never too late to transform the way you eat or to find a new love or even to train for your first marathon. I mean, Forrest Gump ran across the country on a whim in midlife.
While I agree with all the observations above, when it comes to buying life insurance, unfortunately, a certain age, depending on the policy type, is too late. After all, we don’t live forever… yet.
While many things get better with age, life insurance prices are the ones which get worse with age. If you’ve been thinking about buying a policy, buying sooner is definitely better than purchasing next year. In this post, I will go over the types of plans and the maximum age you can apply. Let’s get to it!
The Age Factor
I typically ask potential clients about their reasons for buying a policy so I can assist them in finding the best type of coverage and rates. I have heard anything from, “I just bought a house or had triplets or I’m over 80 years old and need something because I may die soon.” While they all seem very legitimate reasons for getting coverage, the last one (I’m over 80) is a vital concern to insurance carriers.
Therefore, you will be presented with limited choices for getting a policy or excessive costs which may make it unaffordable or not worth it. Age isn’t the only factor the underwriter takes under consideration when determining your rates, but it is the most prominent one. Even if you are in perfect health, once you get to a certain age, you will not find any coverage.
Don’t try to estimate when you’ll die to see if it’s worth it to buy coverage or not. You will never be able to predict your time of death, which is why you buy insurance in the first place—to protect from the “just-in-case” moment in time. Instead, figure out if you need a policy in the first place and see if you can afford to pay premiums.
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The Maximum Age to Buy Life Insurance by Policy Type
Not all policies are the same, and not all companies will sell these types. It’s worth noting that your state’s provisions will apply, which means some plans will not be available in all states.
1. Term Life Insurance
Term life insurance offers temporary protection for a particular period and pays a death benefit if you die during that time. You will be able to buy a 10-year term until the age of 80 years old. With most policies, you will have to undergo an exam, and if you aren’t in good health, you will pay considerably more or get declined altogether.
- Maximum age for buying term life: 80 years
2. Guaranteed Universal Life (GUL)
Guaranteed universal life insurance lets you choose the coverage based on a precise age as opposed to term length. The oldest age to buy this policy is age 85, and the coverage can be up to age 90, 95, 100, 105, 110, or 121 years old. You will have to undergo the traditional underwriting process which includes the exam.
- Maximum age for buying GUL: 85 years
3. Final Expense
Final expense policies are meant to deal with the associated costs of your passing away. A funeral service, medical bills, or burial services are some of the reasons people buy this type of coverage. The premiums remain fixed throughout your life, and the death benefit is relatively small, typically up to 50k, but most people purchase 10k–25k in death benefit.
Although you will not be required to take an exam, your overall and past health will dictate the type of coverage you can qualify for. There are three types of final expense, and each entails a different maximum age for buying coverage:
- Level benefit: There is no waiting period after which the policy goes into effect. You will need to be fairly healthy to get this and the maximum age with most companies is 85 years old. There are two companies who are the exception: Aetna covers up to age 89 and Security National up to the age 90.
- Graded benefit: There is a two- to four-year waiting period during which the policy will only pay a portion of the death benefit if you die at that time. Typically, that is 40% in the first year, 75% in the second, and 100% in the third year. The maximum age to buy these policies is 85 years.
- Guaranteed issue: As the name implies, your acceptance is guaranteed with a two-year graded benefit, which only pays the amount of paid premiums plus 10% interest if you die during the first two years after the policy is in force. You can buy these policies up to the age of 85.
- Maximum age for buying Final Expense: 85–90
You May Not Need Life Insurance at This Age After All
First, if you reached age 85 or older and didn’t need a policy up to this point, you probably don’t need it. As mentioned above, “my mortality is up,” or, “I’m not healthy,” aren’t enough reason to plead with the insurance company to let you buy a policy. They will not sell you one just because you need it.
Second, if your goal for purchasing a policy at that age is to cover the burial expenses and not to be a burden on your loved ones but you have assets or savings that can cover it, you don’t need a policy. Your family can use that money to cover the final expense bills.
Buying life insurance when you think you need it, whether it’s old age or terminal illness, is a bad idea. The agreement between you and the carrier must be fair. You, the applicant, agree to pay premiums, and the carrier agrees to pay the death benefit to your beneficiaries should you die while the contract is in effect.
Simply put, when you pose a higher risk by being too old or too sick, you either will pay a lot more in premiums or won’t be offered any coverage. The sole reason for buying life insurance is to prevent financial hardship for your loved ones.
Whether it’s paying your burial expenses or paying a huge mortgage, the outcome is the same. If you have someone who relies on you or who may suffer financial burden should you die prematurely, get a policy early and gain the peace of mind instead of waiting too long and getting denied.